Emirates airline annual profit jumps 40 percent

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DUBAI, United Arab Emirates (AP) — Emirates overcame the effects of temporary runway closures at its Dubai base to pull in a $1.24 billion annual profit, a 40 percent gain driven by the rapid expansion of its business and helped by a drop in fuel prices, the fast-growing airline said Thursday.

The Dubai government-owned carrier is by far the Middle East's biggest airline, and is expanding rapidly by funneling mostly long-haul travelers through its base in the Gulf commercial center. That growth has helped make Dubai International Airport, which is undergoing a further expansion, the world's busiest international air passenger hub.

The airline said it benefited from the drop in oil prices last year, giving it some relief on fuel costs. But it also cited a number of challenges affecting profitability, including the effects of the Ebola outbreak and armed conflict in several areas where it operates, the strength of the U.S. dollar — its hometown currency is pegged to the dollar — and nearly three months of Dubai runway work last summer that forced it to temporarily ground 19 planes.

Emirates' earnings for the fiscal year that runs through the end of March of 4.56 billion dirhams, or $1.24 billion, far surpassed the 3.25 billion dirhams it earned during the same period a year earlier.

It was the 27th straight year of profit for the airline, a rare winning streak in the industry.

Sales for the year rose 7 percent to 88.82 billion dirhams ($24.2 billion).

Emirates' success has won it plenty of attention, not all of it welcome. It is embroiled in an increasingly shrill dispute with the biggest U.S. carriers, who allege that Emirates and its smaller Gulf rivals are unfairly poaching passengers by relying on government subsidies. Emirates strongly denies the allegations.

Sheikh Ahmed bin Saeed Al Maktoum, the chairman and CEO, cautioned that currency fluctuations, economic uncertainty and "the looming threat of protectionism" will pose challenges for the future. But he said the company was moving into the new financial year "with confidence and a strong foundation for continued profitability."

"We will continue on our journey of steady and rational growth," he said.

Emirates' overwhelmingly wide-body fleet of more than 230 aircraft includes more Boeing 777 and double-decker Airbus A380 planes than any other carrier on the planet. It has orders for another 279 planes still to come.

Those additional aircraft are vital if Emirates hopes to continue adding new destinations. Last year alone, it began flying to Abuja, Nigeria, as well as Brussels, Budapest, Hungary, Chicago and Oslo, Norway.

Sheikh Ahmed told The Associated Press earlier this week the airline aims to increase services "on every continent" by launching new routes and increasing frequencies on more than 140 existing ones. That includes in the United States, where it now flies to nine cities. Orlando will be the 10th when it begins in September.

John Strickland, director of London-based aviation consultancy firm JLS Consulting, said the increasing number and frequency of flights feeding into Emirates' network is opening up an exponential number of possible new connections, making the airline's model even more efficient.

Many of Emirates' routes connect to fast-growing emerging markets in Asia, Africa and the Middle East that are little served by legacy U.S. and European carriers.

"It just happens that the markets growing most strongly are those that connect most logically and geographically via a Gulf hub," Strickland said. "Some of these traffic flows didn't exist before."

The airline's parent company, Emirates Group, which includes the airline and related businesses such as the Dnata ground and travel services provider, reported its profit rose 34 percent to 5.46 billion dirhams ($1.49 billion) on revenue of 96.49 billion dirhams ($26.29 billion).

Emirates Group's 84,000-srong staff will get to share in that windfall. Sheikh Ahmed told them after earnings were announced that they would be getting 9 weeks' extra salary as a share of the profits.


Follow Adam Schreck on Twitter at www.twitter.com/adamschreck .

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